Lawsuit claims Detroit tax foreclosures based on inaccurate bills

DETROIT -- Walter Hicks came home one day in 2013 to find a yellow sticker on the front door of his Robson Street house, and soon noticed the same notice on the doors of about 30 neighboring homes.

The 57-year-old life-long Detroiter said he was shocked to find so many foreclosure notices in his west-side neighborhood, and claims tax assessments there were based on inflated housing values.

"I was upset," Hicks said. "I've been here all my life. I don't know why the city would leave the assessments at the value that they are, and they know themselves that the house is not worth what they're saying they're worth. Taxing me at that rate is not fair at all."

His home's estimated True Cash Value was $9,000, but the city placed the home's value at an estimated $40,000, forcing Hicks to pay five times more in taxes on his home that it was worth, his lawyers claim.

Hicks, four other Wayne County residents and four neighborhood associations filed a lawsuit Wednesday against the county treasurer and the city of Detroit, with the help of the American Civil Liberties Union and the NAACP.

The lawsuit claims tax foreclosures have disproportionately pummeled African-American homeowners in recent years, and were based on false home value assessments.

Messages seeking comment were left for Wayne County Treasurer Eric Sabree and spokesmen for the Detroit mayor's office.

Update: Detroit's lead city attorney Butch Hollowell called the lawsuit flawed and irresponsible:

"City agencies have met with representatives of the ACLU on a number of occasions to share information, and to analyze their position," Holowell said.

"After very careful review, the City is confident that not only is the ACLU's claim fatally flawed as any potential claim was discharged in bankruptcy, but it is also recklessly irresponsible. It would violate compliance with the Plan of Adjustment, indefinitely prolong state oversight of City operations and threaten basic city services to all Detroiters. The City is proud to have played a leading role in new 2014 state legislation allowing installment agreements for those in foreclosure. The result being that 27,539 Detroiters who were in foreclosure a year ago were able to stay in their homes."

The city in January 2014 launched an effort reduce tax bills and individually reassess home values, calling it a first step in reforming the process.

Mayor Mike Duggan at the time acknowledged that "assessments in this town have been a source of a lot of anger to many people."

It was one of his first acts after regaining control of city operations following bankruptcy.

The city's chief assessor at the time reviewed home sales between October 2011 and September 2013 and found that most of the homes in the northwestern portion of the city were over-assessed by at least 20 percent.

Some residents who started receiving notices before that reassessment effort began are now facing foreclosure, which is triggered after three years of property tax delinquency.

The lawsuit filed Wednesday accuses the city and county of attempting to seize the homes of thousands of homeowners because they failed to pay taxes that they should never have been assessed.

"The tax foreclosure crisis is destroying neighborhoods, destabilizing families and inhibiting the economic recovery for thousands of people in the region," said Michael J. Steinberg, legal director for the ACLU of Michigan. "Not since the Great Depression has this region suffered from a tax foreclosure crisis so severe."

Instead of conducting annual assessments or properly updating recent property sales, the lawsuit alleges the city used assessment rolls with estimated values that had no relationship with the actual True Cash Value of the properties, a violation of law, lawyers for the plaintiffs argue.

In an effort to keep his home, Hicks filed for a poverty exemption, which would provide relief in tax obligations because his annual income was below the poverty line.

But he was denied the exemption because another person with the same name owned a separate property, which the city counted as his asset.

Hicks presented proof that the property was not his, but he was still denied.

"Thousands of Detroit homeowners who qualify for a poverty exemption excusing them from paying property taxes have been unlawfully prevented from obtaining that exemption due to needlessly complex and impenetrable application procedures improperly administered by the city of Detroit and the Detroit Citizens Board of Review," the lawsuit alleges.

The board of review is also named as a defendant in the lawsuit.

Lawyers who filed the lawsuit said a foreclosure auction that includes around 5,600 occupied homes is scheduled to begin in September, likely displacing more Wayne County homeowners.

Owner-occupied homes in 100 percent American-American Census blocks in Wayne County are more than 13 times more likely to be at risk of a tax foreclosure sale than 100 percent non-African-American Census blocks, they claim.

"This shorted sighted practice not only violates federal law, but also is creating a human rights crisis in this region," Steinberg said.

After working 20 years as a caregiver, Julia Aikens retired and bought her own home in 2014.

But shortly after the purchase, the 67-year-old began to receive property tax bills on her home that she said were out of line.

Living on a fixed income, Aikens was unable to pay. She then went to the city to file for an exemption, but was denied because she hadn't lived in the home for more than a year.

But Aikens claims there was nothing on the exemption application stating a resident had to be in a home for a year before receiving help.

"Detroit should be a place where everyone can live regardless of whether they are rich or poor," Aiken said, fighting back tears.

"I spent my entire lifetime trying to help people who needed and deserved the help. Alll I'm asking is that the city and the county now give me the help I need. I need that exemption to stay in my home, and I want to stay. I want to be a part of the comeback that the city is trying to make."

Hicks said he wants his tax bills erased.

"What they need to do is adjust everything," Hicks said. "I'm not looking for compensation or no money back, just wipe my slate clean."

Lawyers plan to file motion for a preliminary injunction in the next few weeks, asking a judge to halt foreclosures until bills are adjusted to accurately reflect home values, said Steinberg.

"It's my hope that the county and the city will work with us to enter some sort of consent judgement," Steinberg said. "If not, we just have to litigate them, we have no choice."